New health care law spells end to state's high-risk insurance program

William Tedeschi knew he would need health insurance when he started his own insurance agency, and he knew the Wisconsin Health Insurance Risk-Sharing Plan would be an option.

"I wasn't that familiar with it," Tedeschi said. "But I applied for it, and I was very surprised with the ease of getting into it."

For more than three decades, HIRSP has provided health insurance to people locked out of the insurance market because of pre-existing health problems.

HIRSP is one of the oldest, largest and most affordable high-risk pools in the country, protecting more than 100,000 people over the decades from the threat of catastrophic medical bills.

"It provides a service that's desperately needed," Tedeschi said.

It also is a service that will no longer be needed after Jan. 1 because of the Affordable Care Act.

Starting next year, health insurers will no longer be allowed to deny coverage to people with health problems, and HIRSP is preparing to shut down.

Founded in 1979, HIRSP covers about 24,000 people in Wisconsin, including about 2,300 people insured through a temporary federal program created by the Affordable Care Act in 2010.

Excluding the federal program, the health plans sold by HIRSP are subsidized by an assessment, or tax, on commercial health insurance sold in the state. The tax accounted for $48.7 million, roughly 30%, of HIRSP's $160.1 million in revenue last year. The balance came from premiums.

Doctors and hospitals also accept lower reimbursement rates from HIRSP than they do from commercial plans.

Only Minnesota and Texas have larger high-risk pools than Wisconsin. And the plans available in Texas are about twice as expensive as commercial health plans.

In contrast, HIRSP's high-deductible plans can be less expensive than commercial insurance. Its most popular plan has a $5,000 deductible.

"We've actually been able to lower our premiums," said Amie Goldman, chief executive of the authority that oversees HIRSP.

Costly coverage

Goldman was hired in 2006, when the state created the authority to assume responsibility for HIRSP from the former Department of Health and Family Services.

Since then, HIRSP has added more high-deductible plans and plans paired with health savings accounts.

"Amie Goldman has done a fabulous job," said Todd Catlin, owner of Transition Health Benefits in Brookfield, who is on the HIRSP Authority's board.

HIRSP, he said, has helped make the state's health insurance market work better.

"We have helped a lot of people with HIRSP in the office over the years," he said.

People still must be able to afford the cost of health insurance on their own, and coverage is expensive — especially for those who are 55 and older. The U.S. Census Bureau estimates that 98,873 people 50 to 64 years old — or almost 1 in 12 — are uninsured in Wisconsin.

"It is not inexpensive, but it certainly helps people," said Mark Wurtz, an attorney in Sheboygan who has several clients insured through HIRSP. "It's been a lifesaver."

That was the case for Annette Stebbins.

"It's been my security blanket," said Stebbins, who has been on HIRSP's board since the mid-1990s.

Stebbins, who was diagnosed with a rare liver disease, had a liver transplant in 1992. She never would have been able to afford the drugs needed to prevent her body from rejecting the liver without coverage through HIRSP.

"To me, it's been a gift," she said.

Eligible for subsidies

Stebbins is among those who are disappointed HIRSP is shutting down. And Goldman said the HIRSP Authority has been getting calls and letters from grateful members.

"We had a woman who has been with us for 20 years who wrote us the nicest email about our being here for her," Goldman said.

At the same time, the people now covered through HIRSP will be able to buy any health plan on the market, and Goldman estimates about half of them will be eligible for the subsidies available through the Affordable Care Act.

The subsidies, in the form of tax credits, will be available to people with incomes of up to 400% of the federal poverty level, which comes out to $45,960 for an individual this year. The subsidies are available only for plans sold through the marketplaces, or exchanges, that are being set up under the law.

Many of the largest insurance companies aren't selling health plans on the exchanges. But the Affordable Care Act also limits what health insurers can charge older people to no more than three times what they charge their youngest customers.

That could benefit many of those now covered by HIRSP: The average age of a HIRSP customer is 54, Goldman said.

Winding down

HIRSP notified customers this summer that they will need to shop for a new health plan. It also has put together a plan, which still must be approved by state regulators, for shutting down its operations.

The authority plans to set aside $10 million in reserves to pay the final medical claims. Those will have to be filed by March 30. The HIRSP Authority expects to have paid the last claims by Sept. 30, 2014.

The remaining reserves will be refunded to customers and insurance companies for the excess taxes paid, Goldman said. The authority also may allocate some of the remaining funds to the Wisconsin Hospital Association and the Wisconsin Medical Society.

"It's definitely bittersweet," Goldman said. But she added, "It is a great thing that Wisconsin had one of the first high-risk pools and had this safety net for more than 30 years."

Correction: An earlier version of this story referred to Todd Catlin's insurance brokerage by its former name, Liberty Insurance Group Inc. The brokerage's new name is Transition Health Benefits.